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City settles with Morris property owners on disputed assessments

The City of Morris and property owners who appealed the city's special assessments in Stevens County District Court have reached an out-of-court settlement.

Paul and Zoe Bankord for the past year have protested publicly assessments for improvements on West 6th Street, which is where their Dormer Apartment Building is located.

The Bankords filed an appeal of their assessment for water, sewer and curb and gutter improvements completed last fall. The Bankords felt that assessing the apartments at a rate of 0.75 per unit for all seven units was excessive, and that the improvements would not increase the property value relative to the cost of the assessment.

At its meeting Tuesday, the council opted to take the advice of the City Attorney's office and City Manager Blaine Hill and reduced the Bankord's total assessment by more than half.

The Bankords signed a settlement agreement Feb. 20, and the City Council approved it following a session closed to the public during its regular meeting Tuesday.

In calculating assessments, the city typically assigns a rate of 1.0 for a single-family home, with multiple-dwelling properties paying the 0.75 rate for each unit in the dwelling. The Dormer Apartments would have been assessed at a rate of 5.25, a total of more than $16,500.

The city compromised with the Bankords on a proposal of 2.5 total units for the property. The city kept its full assessments for sewer and curb and gutter intact, but reduced the water assessment from about $14,771 to about $7,037. The compromised assessment total is about $8,818.

The city also will pick up $3,500 of the Bankord's legal fees.

In a memo to the council, Hill recommended accepting the settlement and listed the rationale formulated by Assistant City Attorney Theodora Economou.

The court likely would want to see proof that the city's assessment would increase the value of the property at least by the amount of the assessment total. Hiring a professional appraiser to prepare that information and present it in court was estimated to cost between $3,000 and $4,000.

An even larger problem rested in possibly having the court side with the Bankords and possibly ruling that the entire assessment for the project was flawed. That might have entailed an order to re-do the assessment for all properties that received improvements. The new assessments might have led to possible challenges, and the court might have ruled the city was responsible for legal fees and other costs, such as property owners hiring appraisers to complete value reviews, Hill stated.

By state statute, once the current assessment was certified in November 2007, property owners no longer had the option of appealing their assessment.

Hill also stated that Paul Bankord noted during the assessment hearing that he believed the 0.25 rate was more fair, but that the Bankords were prepared to argue for a 1.0 assessment for the entire apartment property, basing the decision on water usage. Hill studied water use in other properties and found that it was probable there were other properties being assessed at the 1.0 rate that use more water than the seven-unit apartment.

The city insisted that the 1.0 rate for the entire property was not fair and that the 0.25 rate for all units was a stipulation for a settlement.

"1 for 1 is not fair," Hill wrote, also noting that the 0.25 rate for additional units could be a standard for the future.

One multi-unit property will be affected by work planned for this summer, and the city is planning improvements in the Highland Home Addition in 2009. That project will include the Keyrow Apartments, Hill said.

"This level I believe can be used going forward without much argument," Hill stated.

The city also may seek an appraiser opinion before future assessments to "solidify our position for charging our assessments," Hill stated, adding that appraiser opinion letters cost about one-fifth of what a full appraisal would cost. Checking values of affected properties before determining assessments will give the city more concrete information in the event of appeals, Hill said.

In other city business:

 The City Council approved advertising for bids for work planned for this summer on sections of Oregon Avenue and several east-side downtown streets, and on College Avenue and Circle Pines. Bids are expected to be opened April 3 and work is expected to begin in May.

The work areas include Oregon Avenue between East 4th and East 7th streets, and work on East 4th, 5th, 6th and 7th streets between Atlantic and Oregon avenues. The College Avenue work is between East 2nd and East 5th streets, and Circle Pines.

The improvements include the construction of watermains, service lines, storm sewers and curbs and gutters.

Some properties not directly affected by the work still could be assessed if it's determined they are in a storm sewer drainage area.

 Hill met with representatives of a local bank loan pool regarding Stevens County Historical Society loans from the pool and the city. The historical society has an outstanding loan from the pool of about $545,000, and the SCHS also owes the city $110,000, he stated.

The loan pool committee stated that one option was to refinance the terms of the debt but no firm decision was made, Hill stated. He also noted that he is concerned that more be done to pay off the loans because any loss of principal from the city's contribution would leave less available for other business development.

 The council approved a request from the Morris Fire Department that an additional $5,000 be added to a previous appropriation that would net the department two new Jaws of Life tools.

The city budgeted $30,000 to a new JOL tool, but since that appropriation the department determined that one of its JOL tools, which is almost 20 years old, requires about $6,000 worth of repairs, Fire Chief Doug Storck stated.

By trading in the damaged tool and adding $5,000, the city can acquire two new JOL tools, which is a vital part of the department's equipment inventory since the department essentially functions as the county's rescue squad, Storck said.

"It's a must-need tool," Storck said.

The council unanimously approved the move.

 Hill estimated that the Legislature's override of Gov. Tim Pawlenty's transportation bill veto earlier this week will bring more than $500,000 of additional funds to the city over the next 10 years, and that the bill will net Stevens County more than $4 million addition funds over 10 years.